Building a Team

Getting Started in Real Estate 3/5

You have a market and a strategy in mind, how do you start putting the pieces together? The answer is you need a team. A team who you trust and who are far better than you in their specialized field. Without a competent team, you will find yourself rolling the dice far more than you'd want.

There are plenty of resources that walk you through the vetting process. We particularly like David Greene's detailed blueprint in his long distance real estate investing book. While I could use this post to summarize his methodology, it would be a poor substitute for actually reading the book. Instead, I'd like to use this post to explore why finding the right team is the single most important thing you will do in real estate.

Why does it matter?

Why does it matter who your agent or general contractor or any other member of your team is? You're the one making the decisions, don't you just need someone who will do what you ask?

The truth is that if you build your team right, they will be there to fill in the gaps in your knowledge. They will be there to tell you what cross street to avoid and what street to buy on. They will be there to tell you that the deal is crap even though it looks perfect on paper. If you find the right people, you'll find your investing journey much easier.

You are not going to be the expert at finding propeties, the best at managing a rental or ensuring a flip is progressing on schedule. Why would you be when your agent, PM, or GC does this for a living? No, your superpower is going to be growing your business and finding the right people to execute on your vision. Lean into that.

I seriously cannot reiterate how important it is to find the right people, especially making sure to do it properly when you get started. Once your process is in place, it becomes more and more difficult to adjust on the fly. Your team is there to make things easier for you. They will ensure your processes are running smoothly so that you can spend your time on what YOU are best at. Don't cut corners or your future self will not think kindly of present you.

In no way are we experts at putting together a rockstar team. Similar with any passion project, real estate requires constant self-reflection, education, and improvement. Kat and I are constantly learning from our own mistakes.

Trust but verify

I've spent the last section telling you to find the right people and trust what they tell you. Unfortunately, it's a bit more nuanced than that. At the end of the day, it is still your responsibility to verify what they're telling you. They may believe it but that doesn't always mean they are right.

If our agent or PM were to tell us not to invest on a certain street, we would almost always listen to them. If they told us our ARV or projected rents were off, we'd ask them to provide the numbers to support their opinion. When there's a significant difference in expectations, it typically indicates some problem in the process. Maybe your agent will have more recent comps or your PM will have a non-public facing database. Or going the other way, maybe they missed the comps you are using. A difference in opinion is an opportunity to understand what we're doing differently that causes us to reach different numbers. This allows us to recalibrate and ensure future analysis is done properly.

Don't get upset if your team member told you something that ended up being untrue when you could have gotten a second opinion. Everyone makes mistakes, the most important thing is catching and learning from them. Trust what you're told but verify and mentally file it away so that it's available next time.

Building a relationship

Another unfortunate truth is that it's going to be difficult to build a team when you're just starting out. You're a little fish in a very very big pond. Everyone is looking for a rockstar agent but that agent is probably spending the majority of their time on their rockstar investor. For that great PM you've heard about, why should your one property portfolio get priority when your PM has an investor with fourty doors?

Instead, think about finding a "good" agent who is hungry to grow and expand. It may make more sense to work with someone who believes in you and will dedicate their time to your success. The key question is how do you convince someone to seriously work with and for you?

The vetting process is not a one-sided affair. Just as you're there to make sure they tick all your boxes, they are checking boxes on their own end. Real estate is a relationship based business and it's incredibly important to build good rapport with your team members. Respect goes a long way. People will naturally prefer to work with who they like.

Your responsibilities to your team

Just as your team has responsibilities to you, you have the same to them. You're the horse they hitched their cart on and that means that you need to contribute to their success as well. I'm going to break up this section and walk through some of the more important responsibilities I see myself having with my team.

Show them respect

By respect, I don't just mean it in the conversational or relationship sense. While that is important, it is also necessary to acknoledge everything else they do for you.

They are putting in effort and time to run numbers and provide opinions. Make sure you're also doing the same. Before you send that listing to your agent, consider sending your projected ARV, renovation numbers and comps. This signals to them that you respect them enough to not want to waste their time unless you believe the deal is worth their time as well. Show that you respect their time, knowledge and effort.

Have productive conversations

When you disagree, be open to the fact that you may be wrong. The discussion does not need to be adversarial, instead frame it as collaborative and educational. By the end, you both should walk away with a better understanding of how the other person comes to their conclusions and can therefore be faster on the next deal.

Make them a lot of money

At its core, your team prioritizes working with you because you make them money. Our agent likes to say he's the only agent who will talk us out of buying a deal. While that may be an exaggeration, the sentiment is generally accurate across the industry (and to be frank, all industries will have this problem). Your team makes money even when you lose money on a bad deal. For them to talk you out of a deal, it means they believe long term you will continue making them money. It indicates that they see the long term future of the relationship and are looking out for your best interests.

Say thank you

Finally, make sure to thank your team. Take them out for a meal, wish them happy birthday, get to know them. Money may be a great motivator but there are plenty of intangibles that create a great relationship. Respect, likability, friendship, etc. After all, we're all human.

Conclusion

By the end of this post, you won't have the tools to find and vet a team. In fact, even after reading David Greene's book, you won't have the perfect process. Instead, you'll understand the mindset that goes into building a great team. Personally, I think that that's pretty important. If I had to distill our learnings into one paragraph, it would be as follows.

Trust but verify. Take the time to speak to each potential member of your team on the phone. Do your personalities and business styles match? Do you respect and understand each other? Just as you are counting on your team members to make you money, they are counting on you to do the same for them. Constantly iterate on your process and identify failures. Was it an isolated failure or something that can happen again, and if so, what can you and your team do to ensure it never happens again. Commit to building a long term relationship and constant improvement. And finally, if it isn't working out, don't be afraid to move on.

Homework

Don't expect to be able to find and vet a team quickly. Plan to set aside at least two months to read, learn and start the process. This should be a rough blueprint for how to start.

1. Read David Greene's book, particularly the chapters around vetting various members of your team
2. Write up a blueprint of key questions based on the book.
3. Reach out to investors and professionals in the market (see previous post). Ask for recommendations for team members and start vetting them

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